1st of all please remember Cost of Goods Sold does not apply to just product based companies if you provide a Service you will have cost of services provided as well!

Definition

Investopedia defines Costs of Goods Sold as â€œThe direct costs attributable to the production of the goods sold by a company. This amount includes the cost of the materials used in creating the good along with the direct labor costs used to produce the good. It excludes indirect expenses such as distribution costs and sales force costs. COGS appears on the income statement and can be deducted from revenue to calculate a company’s gross margin. Also referred to as cost of sales.â€ http://www.investopedia.com/terms/c/cogs.asp

QuickBooks Help defines Cost of Goods Sold as â€œThe Cost of Goods Sold account is added to your chart of accounts the first time you add an inventory item. QuickBooks uses this account to track how much you paid for goods and materials that were held in inventory and then sold. While an item is held in inventory, its value is tracked in the Inventory Asset account, which is also added to your chart of accounts when you create your first inventory item. As soon as that item is sold using an invoice or sales receipt, its value is taken out of the Inventory Asset account and put into the Cost of Goods Sold account.â€

For a service based company a few items that might be included but not limited to in your COGS account could include materials used to provide service, direct labor, subcontracted labor and commissions.